The LUTE model of travel by car, bus and on foot has been used to study the effect of increasing fuel prices on travel and fuel use, subject to time and trip number budget constraints on the travellers, and financial and vehicle capacity constraints on the bus services provided. The modelling predicts an elasticity of car use with respect to fuel cost per kilometre travelled of about-0.5, consisting of -0.3 due to changes in car trip lengths and -0.2 due to changes in car ownership, with a negligible contribution from changes in the number of journeys by car, values consistent with reported estimates from time-series analyses when allowances have been made for differences in time scale and scope. The elasticity rises with price as fuel accounts for an increasing proportion of the total cost, to -0.9 at twice and -1.5 at four times present fuel per km. The higher cost per km shortens car trip lengths and the resulting time saved is spent on longer trips by bus and on foot. Although buses use less fuel per passenger -km, subsidising urban bus services will not normally save fuel because more is used carrying additional passengers who previously walked or who were car passengers than is saved by the few car drivers attracted to use the bus. (A)

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